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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13116
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a tax question. I went through a divorce and my

Customer Question

I have a tax question. I went through a divorce and my settlement left me needed to live out of my retirement. I took 43000 last year out of my retirement. How does the 25% penalty work. I am 39 but I was told the 25% only applies if taken out of first 2 years of plan.
Submitted: 6 months ago.
Category: Tax
Expert:  Robin D. replied 6 months ago.
HelloThere is a 10% tax penalty if you make an early distribution from your retirement account. Early means before you turn 59 1/2.A special rule applies to a distribution received from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer’s SIMPLE IRA plan. Under this special rule, if the additional income tax on early distributions applies to a distribution within this 2-year period, then the rate of additional tax under this special rule is increased from 10 percent to 25 percent.If your plan is not a Simple IRA then that does not apply to you.What type of plan did you take out of.
Customer: replied 6 months ago.
I am not sure..i am looking at my 1099 R form now
Customer: replied 6 months ago.
box 7 says IRA/SEP/SIMPLE
Customer: replied 6 months ago.
also this is not a new plan. At least 4 years ago. I rolled a 401K over to this plan in 2012
Expert:  Robin D. replied 6 months ago.
Then this is an IRA. You would be subject to 10% but not the 25% unless it was a SIMPLE IRA.A simple IRA is for mostly self employed. If you rolled form an 401k then this is TRADITIONAL IRA.The 10% but not the 25%.You pay the additional tax when you file your return. It will be calculated on the distribution amount.You are required to click a positive rating if I am to be credited with the response.You have to actively click on a rating and click submit. Smiley Faces or Stars.
Customer: replied 6 months ago.
So, I moved jobs in 2012. I had all my money in a 401K at that company. I transferred to ***** ***** in 12. So, that makes it a traditional IRA?
Customer: replied 6 months ago.
Because on w2 for ***** ***** it reads in box 7 for distribution code: IRA/SEP/SIMPLE
Expert:  Robin D. replied 6 months ago.
Yes it was a Trad IRA. The box says all because any of those would be in that box.